AI Growth Accelerates as Companies Invest Billions
The pace of investment and innovation in generative AI (GenAI) is accelerating as companies spend hundreds of billions to generate tens of trillions in business returns over the next decade, according to separate reports from IDC and Gartner.
Gartner’s Forecast
Gartner announced that it sees worldwide GenAI spending growing 76.4% in 2025 to reach $644 billion. About 80% of that spending is going to AI-enabled devices and servers, the analyst firm said, with about $37 billion going to software and $28 billion to services.
Device Makers Embedding AI
Device makers are also embedding GenAI into consumer products – whether customers are asking for them or not. "The market’s growth trajectory is heavily influenced by the increasing prevalence of AI-enabled devices, which are expected to comprise almost the entire consumer device market by 2028," said John-David Lovelock, a distinguished VP analyst at Gartner. "However, consumers are not chasing these features. As the manufacturers embed AI as a standard feature in consumer devices, consumers will be forced to purchase them."
Gartner’s Impact
GenAI is having a transformative impact across all aspects of IT spending markets, Gartner said, adding that it "suggests a future where AI technologies become increasingly integral to business operations and consumer products."
IDC’s Forecast
That sentiment of far-reaching AI effects jibes with a forecast released by IDC, which said that AI will account for 3.7% of the world’s economy by 2030 and drive a cumulative impact of $22.3 trillion.
IDC’s Multiplier Effect
IDC says that AI investments have the benefit of a multiplier effect. For every $1 spent on AI solutions and services by adopters, IDC says it will generate an additional $4.90 in the global economy.
Hurdles Remain
However, rosy predictions have a way of petering out. Sparingly few GenAI projects are making it into production, and Gartner noted last summer that 30% of GenAI projects will be abandoned this year. A number of hurdles – including access to GPUs and power, availability of new training data, stubbornly high hallucination rates, security and privacy concerns, and new regulations – remain to be cleared.
Conclusion
The question is: Is there enough runway for GenAI to clear these hurdles before CFOs put their collective feet down?
FAQs
Q: How much is GenAI spending expected to grow in 2025?
A: Worldwide GenAI spending is expected to grow 76.4% in 2025 to reach $644 billion.
Q: What is the main driver of GenAI spending?
A: The race among AI model builders to develop and train bigger and better foundation models is driving much of the hardware spending.
Q: How much of GenAI spending is going to software and services?
A: About $37 billion is going to software and $28 billion to services, according to Gartner.
Q: What is the expected impact of GenAI on the world’s economy?
A: AI is expected to account for 3.7% of the world’s economy by 2030 and drive a cumulative impact of $22.3 trillion, according to IDC.
